CYPRUS Trends and Developments Contributed by: Angelina Fitoz, Svetlana Remezova, Darya Averyanova and Sude Dogan, Lawitt Buro
Investment funds: the rise of tokenisation Advances in technology and data are transforming the investment industry in 2026. Innovation in crypto- assets and tokenisation are bridging the gap between traditional finance (TradFi) and decentralised finance (DeFi), creating more investible opportunities for both institutional and retail investors. Cyprus is evolving its fund framework to reflect these market demands, particularly through the Registered Alternative Investment Fund (RAIF) model. These funds are leveraging large language models and advanced machine learning to synthesise information at scale and build portfolio simulations more efficiently. AML and transparency: DAC8 and CARF The implementation of DAC8 and the Crypto-Asset Reporting Framework (CARF) took effect on 1 Janu - ary 2026. These frameworks expand the scope of automatic exchange of information to include crypto- assets and e-money transactions. Reporting crypto- asset service providers are now required to disclose information on transactions and transfers, aligning Cyprus with international tax compliance and trans - parency standards. Conclusion: a hub built on credibility The fintech sector in Cyprus has successfully transi - tioned from an era of experimentation to one of regu - lated scale. The combination of a clear 8% crypto tax, the full implementation of MiCA and DORA, and a proactive regulatory stance during its EU Presidency has solidified the Republic’s status as a top-tier Euro - pean hub. For firms looking to scale across the EU, Cyprus offers a unique blend of tax efficiency, regulatory predictabil - ity and strategic access to the European Single Mar - ket. By making it easier for entities that have been in the Cyprus market for a long time, as well as introduc - ing new rules for future market participants, but retain - ing the right to a “compensatory approach”, Cyprus is becoming an increasingly attractive country for the development of the fintech industry.
same in quality for the operator, combining all the requirements of the regulator. Strategic opportunity: the Cyprus EU Presidency As Cyprus takes the helm of the EU Presidency for the first half of 2026, it is positioned as an influential voice in shaping the next phase of digital market regulation. The jurisdiction is focused on enhancing EU competi - tiveness by advocating for the simplification of digital rules and boosting legal certainty. This is the point of a new market development. Cyprus is becoming a real “digital hub” for the entire European Union. Advancing the FiDA framework Under the Cypriot presidency, there is a renewed push to finalise the Financial Data Access (FiDA) framework. FiDA aims to extend the principles of “open banking” to “open finance”, allowing consumers to share their investment, insurance and pension data with trusted third parties. Cyprus is championing a balanced approach that encourages innovation while rejecting exclusionary market restrictions that could raise costs for Europe - ans. New rules, but compensatory actions within the framework of law enforcement – this is the new policy of Cyprus in the field of fintech. Digital euro and the payments revolution While the digital euro project is in its preparation phase, 2026 is a critical year for legislative progress. If EU law-makers adopt the regulation in 2026, a digital euro could ensure that central bank money remains available in an increasingly digital economy. In Cyprus, the share of e-commerce payments increased signifi - cantly to roughly 26% by 2024, highlighting the speed at which digital payments have become part of eve - ryday life. Real-time expectations and AI-driven risk Instant payments are becoming the standard, but faster payments need stronger protection. In 2026, AI-powered fraud detection and behavioural analy - sis have become essential as instant transactions increase. Merchants and platforms must offer choice and flexibility, with the ability to switch easily between cards, account-to-account (A2A) payments, wallets or tokens being key for success.
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